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Strategies & Market Trends : The ultimate play:STRADDLES on earnings announcements.
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To: farouk a. hassieb who wrote (47)7/24/1996 10:31:00 PM
From: Chris Baker   of 140
 
Interesting on INTC.

Hope you do well with USRX. I tried your earnings combinations a couple of times. Problem was I found the option writers wanted an extra premium for extra implied volatiltiy just before earnings announcements. The next day the premium was reduced and the options went down even if the stock didn't move. That's what attracted me to long-term options - there's less of this premium and they really move dramatically sometimes, plus you don't have the time value to deal with.

On INTC your strategy is different from mine, although I'm very open to some new ideas right now. I rwould have waited for INTC to fall quite a bit then sold some of the puts when the stock was down and Puts were at a good premium. I then wait for the rebound so as INTC moves up the longer-term call also moves up. I plan to keep my long-term options for quite a while saving on commission costs and bid-ask spread. (I haven't found how to get quotes on LEAPS, but need to look at them.)

At this point the market looks OK for a while so I'm not buying any additional puts to cover todays's upward movement of some of my long term options. Here's some of today's movement in my Calls:

CSSC up 5 to 57: Jan 80 Call went from 3 to 4 1/8
PAIR up 4 to 48: Jan 65 Call ask went from 5 to 7 5/8
ASND up 2 7/8 to 44 3/4: DEC 60 Call ask went from 2 7/8 to 4

On the market: Who would have guessed CSCC would close up over 10 from it's low open this morning or over 20% intraday? Meanwhile PAIR jumped and most people today bought Puts on PAIR. That's definitely a change - in the past most people bought Calls when a stock made a big jump up (allthough probably means there willl be some shorts on PAIR tommorow.)

Even IOMG is is attracting more Puts. The old pattern was if IOMG went up most people bought IOMG Calls, and if IOMG went down most people also bought IOMG Calls. Some healthy signs in these past high-fliers?
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